24/7 Wall St. » Crocs

Crocs Earnings Reaction Uglier Than Its Shoes (CROX)

247wallst — Tue, 19 Feb 2008 16:38:16 +0000

Crocs, Inc. (NASDAQ: CROX) has posted its fourth Quarter revenues rose more than 99% to $224.8 Million while its diluted EPS rose more than 73% to $0.45. First Call had estimates at $207.6 million and $0.44 EPS.

For fiscal December-2008, Crocs reiterated its previously issued growth targets of 50% for the first half, and it expects revenues of approximately $1.16 Billion and net income per diluted share of approximately $2.70. We show First Call estimates at $1.18 Billion and $2.71 EPS. That means that the bulls are going to have to hope the company is merely under-promising so it can over-deliver.

Ron Snyder, President and CEO: "…We experienced better than expected sell through of our fall line across men’s, women’s, and children’s in each of our markets. To meet the higher than anticipated orders over the holiday period we delivered a meaningful amount of Mammoths by air-freight, which impacted our gross margin."

If you think we are critical of Crocs shoes being an ugly fad, you should see what we said about OLD NAVY after its president left today. CROX shares closed down 4% today at $32.08 ahead of results, yet shares are down another 12% at $28.25 in after-hours trading. Its 52-week trading range is $21.68 to $75.21. That low is from a year or so ago, because over the last couple of months shares only traded as low as $25.28 during the sell-off.

The truth is that this reaction is the initial reaction in after-hours trading. By the morning, we could even see a recovery if the value investors manage to show any force. In a slower economy and after a more than 60% cut in the stock price you would expect that at some point even a fickle Wall Street will learn to factor in a lack of upside in apparel fads. This now trades with a 10.46 forward P/E if its own estimates for 2008 come to fruition. Even if we think the shoes are ugly, this one is starting to look cheap on valuations if that fad just stabilizes rather than disappears.

Jon C. Ogg
February 19, 2008

Crocston & New Crocs City (CROX)

247wallst — Wed, 21 Nov 2007 09:11:30 +0000

This morning Crocs, Inc. (NASDAQ:CROX) announced it will open retail stores in Boston and New York City on Friday, November 23rd, its first East Coast locations.

As an extra incentive to come buy at the stores, Crocs will give away a CD featuring up-and-coming artists to the first 3,000 customers who try on a pair of newly launched YOU by Crocs™ shoes at each location. Crocs already has more than 25 company stores worldwide, but here are the new locations:

The new Boston Crocs retail store is located in the historic Haymarket area at Faneuil Hall.
The New York City Crocs retail store is opening at 270 Columbus Avenue.

Pure play stores like this can be phenomenal successes, and they can be the perfect tell for when a trend is at the end. That may not be the case yet, but it’s days of massively beating and exceeding guidance have been deemed as behind it if you have watched the stock fall from $75.00 to under $40.00 after a meteoric rise. For some reason I am not that impressed here, and with another 3% drop pre-market to $37.36 it doesn’t look like Wall Street is that impressed either.

Jon C. Ogg
November 21, 2007

Crocs: New Clothing Line Equals New Highs For Its Stock

247wallst — Mon, 27 Aug 2007 07:58:50 +0000

Crocs. Inc. (NASDAQ:CROX) is trading up at a new all-time high in pre-market activity as the shoe maker is unveiling new product lines today. The company is using its Crocslite(TM) material for new garments.

The company is unveiling new short sleeve and long sleeve tees for $36 to $40 MSRP. It is also rolling out new long sleeve and short sleeve woven shirts ith a $54 to $58 MSRP. The new line for kids will be shorts, pants, and skirts that can all be accessorized and customized with the Jibbitz charms.

Crocs is debuting these new lines at MAGIC Marketplace in Las Vegas this week, and they will be on sale in late October for the holiday sales. The company said it will also introduce a spring 2008 apparel line for a wider use of its Crocslite(TM) materials.

Shares are trading up 5% at $62.00 in pre-market trading. The prior high was $61.35.

Jon C. Ogg
August 27, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Cramer Calls Under Armour & Crocs (UA, CROX, NKE)

247wallst — Tue, 31 Jul 2007 12:46:02 +0000

On today’s TheStreet.com video, Jim Cramer again pushed Under Armour (NYSE:UA). The stock is up big after earnings from this morning. He noted how he was critical at its last earnings report, but this quarter they overdelivered big on an under-promise. It is one to own for back to school and for Christmas and isn’t one you can really worry about the actual stock price. Cramer even noted, "Under Armour is the next Nike (NYSE:NKE)!". He thinke their clothing is now a required outfit for sport teams. Under Armour shares are putting in new all-time highs up over 15% on the day. For unbridled growth Cramer said you can go listen to the Crocs (NASDAQ:CROX) call. It too is putting in another 52-week high today with its shares up over the $60.00 handle. That’s up 300% over the last year. When you look at the last earnings report, it’s just too hard to not give the company credit.

Jon C. Ogg
July 31, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Crocs Eats a Competitor; Buys Bite Footwear (CROX)

247wallst — Mon, 30 Jul 2007 07:57:29 +0000

Everone knows Crocs, Inc. (NASDAQ:CROX) by now. Its meteoric stock rise is nearly unprecedented in modern footwear stocks. The company is acquiring a competitor this morning by the name of Bite Footwear. Bite has probably bitten as far as being a real competitor though. With the price tag you might even wonder if Crocs just wanted to fend off what is probably a fiscally troubled future threat that a stronger competitor could have done more with.

The size of the buyout is only a $1.75 million cash payout, with the potential for an earn-out of up to $1.75 million if certain earnings targets are acheived over a 3-year period. Bite was founded in 1996 and makes sport sandals and shoes that look eerily similar if you visit the company website. It sells shoes for golf, adventure, healthy lifestyle, and water sports. It looks like Crocs wants to apply its own materials into the existing manufacturing lines already in place to instantly expand its product offerings.

Crocs acquired Jibbitz last year, and a buyout of this size will be tiny for the company to integrate. It looks like it gets some instant new designs and also some instant R&D, so for the price it sounds like a lay-up for a fast-growth footwear company. Even if this ends up being a ‘competition killer’ as the sole ambition, this is a small price tag that won’t ever be noticed by shareholders. So far it is being well received as Crocs shares are trading up 2% pre-market. This is also on the heels of last week’s major earnings beat and hiked guidance.

Jon C. Ogg
July 30, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Crocs Sues Its Way Out of Ugliness

247wallst — Tue, 03 Apr 2007 04:26:47 +0000

Perhaps one of the more interesting ways of looking at companies is trying to garner the mindset of the company’s legal department and the "Legal Proceedings" section of annual reports. Crocs (CROX-NASDAQ) filed its annual report last night and it appears to be in many different legal activities where it is suing companies for trying to sell similar shoes and the companies distributing them. Patent, trademark, and copyright does have to be protected, but sometimes things go too far. At least they didn’t sue The Netherlands Historical Society for making clogs long ago as the original work shoes, even if theirs were made of wood. The suits won’t likely damage Crocs, but they may be delusional on what they really own and what others should be allowed to do. Read their pending lawsuits and legal actions below:

In January 2005, our direct subsidiary Foam Creations filed alawsuit against Holey Soles Holdings Ltd. (“Holey Soles”) in theFederal Court of Canada, Trial Division (at Toronto, Ontario). Thecomplaint alleges trademark and copyright infringement relating to thedesign of some of our shoe models. We are seeking a permanentinjunction with respect to any further acts of infringement on ourintellectual property, as well as damages and attorneys’ fees. Thisaction is still pending.

In August 2005, Holey Soles filed a lawsuit against us in the UnitedStates District Court for the Southern District of New York. HoleySoles seeks a declaratory judgment that we do not have any validcopyright or trade dress rights with respect to the design of ourfootwear. In addition, Holey Soles seeks a declaratory judgment thatthe manufacture, sale and distribution of its footwear products doesnot constitute unfair competition and does not infringe on ourcopyrights or trade dress rights. On our motion, the action has beentransferred to the United States District of Colorado where it has beenstayed pending the outcome of The International Trade Commission(“ITC”) Investigation No. 337-TA-567 discussed below. We do not expectthe ultimate resolution of this matter will have a material adverseimpact on our business.

On March 31, 2006, we filed a complaint with the ITC against AcmeEx-Im, Inc., Australia Unlimited, Inc., Cheng’s Enterprises, Inc.,Collective Licensing International, LLC, D. Myers & Sons, Inc.,Double Diamond Distribution, Ltd., Effervescent, Inc., Gen-X Sports,Inc., Holey Soles Holdings, Ltd., Inter-Pacific Trading Corporation,and Shaka Holdings, Inc., alleging patent and trade dress infringementand seeking an exclusion order banning the importation and sale ofinfringing products. The utility and design patents asserted in thecomplaint were issued to us on February 7, 2006 and March 28, 2006respectively, by the United States Patent and Trademark Office. The ITChas issued final determinations terminating Shaka Holdings, Inc.,Inter-Pacific Trading Corporation, Acme Ex-Im, Inc., D. Myers &Sons, Inc., and Australia Unlimited, Inc. from the ITC investigationNo. 337-TA-567 on the basis of settlement and Cheng’s Enterprises, Inc.on the suspension of accused activities. The ITC Administrative LawJudge issued an Initial Determination of non-infringement related toone of the patents at issue. Crocs filed a petition with the Commissionto review this determination. The Commission granted us a petition andon February 15, 2007, after briefing by the parties, the Commissionvacated the ALJ’s determination of non-infringement with respect to theremaining respondents and remanded it to the ALJ for furtherproceedings consistent with the Commission’s order. On February 22,2007, the ALJ issued an order scheduling an administrative trial on allissues, which had previously been postponed, for January 14, 2008. OnMarch 1, 2007 we petitioned the Commission to review the ALJ’sscheduling order and set an earlier trial date.

On April 3, 2006, we filed a complaint in the U.S. District Court forthe District of Colorado alleging patent and trade dress infringementand seeking injunctive relief against Acme EX-IM, Inc., AustraliaUnlimited, Inc., Cheng’s Enterprises, Inc., Collective LicensingInternational, LLC, D. Myers & Sons, Inc., Double DiamondDistribution, Ltd., Effervescent, Inc., Gen-X Sports, Inc., Holey SolesHoldings, Ltd., Inter-Pacific Trading Corporation, Shaka Holdings,Inc., and Does 1-10. The utility and design patents asserted in thecomplaint were issued to us on February 7, 2006 and March 28, 2006respectively, by the United States Patent and Trademark Office. Consentjudgments have been entered against Shaka Holdings, Inc., InterpacificTrading Corporation and Acme Ex-Im, Inc. We have entered into asettlement agreement with Australia Unlimited, Inc., and on January 25,2007 have filed a stipulation for dismissal of all claims andcounterclaims. We have entered into a settlement agreement with D.Myers & Sons, Inc. and plan to file a consent judgment with thecourt related to D. Myers & Sons, Inc. We do not expect theultimate resolution of this matter will have a material adverse impacton our business.

On January 29, 2007, we filed an action in Colorado District Court,Boulder County, alleging breach of contract by Australia Unlimited. Weallege Australia Unlimited breached the settlement agreement from theprior litigation by introducing a new shoe design not approved by us.We obtained a temporary restraining order enjoining Australia Unlimitedsale of the new shoe; however, our motion for preliminary injunctionwas denied. Australia Unlimited removed the case to federal court, CaseNo. 07CV00221, and alleged a counterclaim for breach of contract andthat it is entitled to recover damages for the time that the temporaryrestraining order was in effect.

Although we are subject to other litigation from time to time in theordinary course of business, we are not party to any other pendinglegal proceedings that we believe will have a material adverse impacton our business.

Hopefully the won’t sue us for pointing out how the ugliness of theirshoes has somehow contributed to all of their newfound success. Theyneed a new slogan: "Crocs, Suing Our Way Out of Ugliness."

Jon C. Ogg
April 3, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.